Current Mortgage Rates

Interest rate analysis: Fed minutes

At its October 31, 2019 meeting, the Federal Open Market Committee (FOMC) cut interest rates by 0.25%, lowering the target range for the Fed funds rate to 1.50% – 1.75% from 1.75% – 2.00% the month before.

8 FOMC committee members voted in favor of the rate cut, signaling general consensus within the Fed in its views on inflation trends and the direction of the economy.

Given the uncertain direction of rates, prospective homeowners should carefully gauge future movements in interest rates alongside price changes in their local housing market.

Will interest rates go down in 2020?

Rates are expected to stay flat for the early part of 2020 as the Fed pauses to assess economic data before deciding whether to pursue further rate cuts. Rates may have further to fall depending on whether signs of a weakening U.S. economy emerge.

The on-going U.S.-China trade war and slowing international growth present the most obvious major risks for the coming year and will be monitored closely by the FOMC.

In spite of these risks, the U.S. economy grew at an acceptable rate of 1.9% of GDP in the third quarter. Unemployment also remains at record lows of around 3.6%

The Fed’s latest rate cut marks the third one in 2019 which few experts foresaw the same time last year, when most forecasts predicted a substantial rise in rates.

What does this mean for mortgage rates?

The Fed’s rate cuts translate into lower mortgage interest rates for borrowers, as lenders pass on the reduced borrowing costs to their customers.

The majority of borrowers who obtained mortgage loans from our lender marketplace were able to obtain home loans with interest rates under 4% as of early November, while almost no borrowers obtained rates under 4% just one year earlier.

Prospective homeowners may find themselves playing a balancing game when it comes to weighing mortgage rates vs rising home prices.

Borrowers shouldn’t wait too long to lock in a mortgage rate or refinance rates, as it’s possible that increases in home prices may offset any interest savings you gain from potential future dips in rates. There’s also no guarantee that rates will continue to fall if the economy improves.

Depending on how healthy the housing market is in your area, it may make more sense to buy sooner rather than wait for rates to fall further.

Compare mortgage rates from top lenders in your area

What goes into your rate and fees

Once you’ve chosen your loan program, the actual interest rate you’ll receive and fees you’ll pay can vary depending on your financial picture and the type of property you’re buying. Here’s what goes into your costs.

Your credit score

Your credit score will determine how low or high your interest rate will be. The higher your scores, the lower your rate will be. Some programs also have minimum scores to qualify, so make sure know the credit scores you need to buy or refinance your home. A score of 740 and above is considered excellent, 680 to 739 is very good, 679 to 640 is fair, and 500 to 639 is considered poor.

How big your loan is

The higher your loan amount, usually the better your rate will be.  Be sure to read the fine print if you see online rates advertised. Very often the rates will be based on a $200,000 to $300,000 loan amount. Smaller loan amounts very often come with higher interest rates or costs.

For jumbo loans, you can expect lower rates than conventional mortgages, especially if you have exceptional credit.

What type of property you are buying

The best rates are usually offered for a single-family residence, so if you’re buying a manufactured home, condominium, or multi-family home, the rates and costs will often be higher.